News & Insights

Capital Gains Tax (CGT) is often viewed as tax payable by the wealthy.  However, more and more people are disposing of assets that incur a CGT liability.

Do you sell items on online auction sites such as eBay?  Did you know that if you sell a possession for more than £6,000, you may have to pay CGT on any gain.

Capital Gains Tax (CGT) what is it?

CGT is the tax on any gain or profit made from selling an asset which has increased in value.  CGT also applies when as asset is gifted, transferred, swapped or when compensation is received for a lost, stolen or damaged asset.

Assets which will be taken into account for CGT are:

• Personal possessions valued at over £6,000
• Property which is not your main home
• Your main home if used for business purposes
• Business assets
• You may have to pay CGT on overseas assets

CGT is not payable on ISAs, PEPS, Government Gilts or Premium Bonds or lottery wins.

From April 2025, the rates of CGT for higher rate tax payers are:

24% on gains from residential property and other chargeable assets

32% on gains from carried interest if you mange an investment fund

For basic rate tax payers, the rates are lower:

18% on gains from residential property and other chargeable assets

32% on gains from carried interest if you manage an investment fund

For further information click here

Exemptions and allowances

Everybody has a capital gains tax allowance.  From April 2025, this is £3,000 for individuals and £1,500 for trusts.

There are also a number of exemptions.  For example, transfers between spouses are exempt from CGT.  Gifts to charities are also exempt.

There are also certain expenses that can be deducted for CGT purposes.  For example, if you carry out improvements to a second property, these are often deductable.

When should you pay the CGT?

If you sell a second property, the gain must be reported to HMRC and the CGT paid within 60 days of completion.

All other gains must be reported using a Self-Assessment Tax Return or the “real time” CGT service on the government website by 31 December in the year the gain was made.  The tax must be paid by 31 January the following year.

How do HMRC know that you have incurred a CGT liability?

HMRC can launch investigations following discrepancies and unusual activity on Tax Returns.  HMRC will usually send you a ‘nudge’ letter if they believe you have not reported your capital gains correctly.

Many financial institutions pass information to HMRC regarding gains made, this includes Banks and Investment Platforms.

Platforms like eBay and Vinted also share information with HMRC.

What should you do?

If you are selling assets, such as possessions and shares that can incur a CGT liability, it is very important to keep records.  It is good practice to keep financial records for at least 5 years for tax purposes.   Records can include:

• Financial statements
• Tax Returns
• PAYE Records
• Business insurance documents and certificate

Property and asset records & valuations

• Receipts, Bills and Invoices for assets bought and sold;
• Invoices for an expenditure you have spent on second properties e.g. building a conservatory, new bathroom.
• Invoices for any legal or estate agent fees on second properties.

It is important to remember that you will only pay CGT on any gain and only if this is over your annual allowance.  Keeping accurate records ensures you know what you paid for an item or for shares and you can therefore calculate if you have a gain when you sell these.

How we can help?

Our private client team can provide advice on CGT.  We also have an in-house accountant who can assist in filing CGT Returns.